Valkyria Chronicles is a turn-based strategy RPG set in the continent of Europa, modeled after real-world Europe during wartime. Europe is torn by war between the two great powers of the Atlantic Federation and the East Europan Imperial Alliance, and the neutral territory of Gallia is dragged into the war when the Empire invades to claim the territory's Ragnite ore resources. The player experiences the story from point of view of Welkin Gunther, a Gallian who is forced to command his father's experimental tank Edelweiss in order to protect his homeland alongside watch captain Alicia Melchiott. Together they join the Gallian Militia to push back the Imperial invasion and uncover the mystery behind the Valkyrian race said to wield incredible power.

In each mission, players deploy a platoon of soldiers drawn from a roster of up to 50 recruitable characters. Depending on the mission, players also have the option of deploying heavy support in the form of a tank. The number of characters or vehicles who can take action are dictated by the remaining "CP" available to the player each turn, and players choose how they wish to allocate these to order which units on the field.

The actual actions that an active character can perform meanwhile are dictated by their own remaining "AP", which can be allocated to any combination of movement and attacking. Players will have direct control of an active character, moving them without being confirmed to a grid and shooting or using other subweapons with manual aim. This flexibility of control remains one of the most fondly remembered features of Valkyria Chronicles, and it even extends to tanks should the player be allowed to bring one for the mission at hand.

Valkyria Chronicles also featured a unique visual direction where despite using 3D polygons for most in game models including characters, graphics appear as if they were drawn in watercolor thanks to what Sega called the "CANVAS" engine. This look was intentional on the part of the developers, who sought to create a unique style for 3D graphics without realism.